If your price increase by 10% and quantity sold increases by 20%, is there a way to quickly calculate new revenues without figuring out what the new price is or qty is after the increase? Say old price was 5, quantity was 6. Keeping the numbers simple here as an example but the real ones are much larger
(editiert)
Hi there,
Yes, you don’t need to calculate the new price or quantity.
Basically you have:
p*q*1,2*1,1=p*q*1,32
So you can say that revenues will increase by 1/3 after the change (or by 32% if you want to be very precise).
Best,
Francesco
Hi there,
I see what you're trying to do here, but I think in this case a shortcut will add more complexity/difficulty than anything.
I'd do .5 (10% of 5) times 1.2 (20% of 6) to understand the difference.
Thanks, so +0.5 x +1.2 would be +0.6, so does this mean Revenue increases by +0.6? Because if I multiple (5x6) and subtract from the new revenues from (5.5x7.2), I don’t get the delta that I would get if I just multiply the delta price x delta quantity.
Hello!
I don’t think that there are any tricks here! Actually, it’s a pretty straight forward math:
Price x quantity x 1.1 x 1.2
5 x 6 x 1.1 x 1.2 = 30 x 1.1 x 1.2 = 33 x 1.2 = ~40
Hope it helps!
Cheers,
Clara
Thanks, is there a quick way to find the incremental revenue without calculating the new revenue or new price / quantity?
Hi there, you don’t need to calculate the new revenues/price/quantity with the formula above, you will automatically know revenues will increase by 32%. Hope this helps